Room for Improvement

Dividends have been staging a comeback all year, but they have a way go before they'll get investors back into the equity markets.

THE U.S. STOCK MARKET is 35% undervalued, and a change in corporate dividend policies could revive investment flows into equities. That's how it looks to Robert Maltbie, managing director of Singular Research, an independent institutional-research provider. He's of the opinion that payout ratios need to return to historical norms of 54% from the current historical low of 34%. The latter, he says, makes sense only when there are plenty of growth opportunities.